Officials in the procurement function repeatedly engage in the selling process, with suppliers. But, they refrain from admitting that they are selling-preferring instead to call it negotiation. In my view, they can keep the procurement label, but should be trained in selling skills. Here’s why?
I once had such a team, from a Tier 1 bank, in my class; but they just wanted to learn negotiation skills-not selling! And their most excruciating thorn in the flesh was what every salesperson faces daily-objections. “During negotiations, the suppliers disparagingly complain that we pay them so little yet we post billions in profits,” they lamented.
The sellers (sorry, procurement officials) were stumped at this point. In fact, some, cringing at the (disrespectful) accusation, secretly agreed that the bank was unfair; completely oblivious to the fact their pricing was thought through, and some were even involved in setting it. There was one who even admitted to getting so uncomfortable with the complaint (he didn’t see it as an objection, how could he?), “I just told them, it’s true the bank has made the billions but it has also set the procurement policy which we are using, so our hands are tied.” This friction is akin to a seller (not procurement official) being stumped at the objection, “You are pricey” and, naively saying, “Yes. I keep telling the office so but they don’t listen.” The only difference is that in the latter case, the sale is likely lost at this point. In the former, the sale (sorry, negotiation) becomes tension filled and awkward, with the disappointed supplier now weighing his options, and, worse, just as with the seller, confirming his belief that the institution is unjust. In both instances the seller miserably failed to hold up his own.
Now if only both had practiced how to handle objections, the friction would have been better managed. Both would have believed in their product offering and been assertive (instead of unbelieving and embarrassed), and remembered the value in the pricing. The officials would have remembered that, ‘We supply for Trillion Bank’, in any supplier’s resume, is pitch enough to supply for any bank in the region; instead, just as with the non-procurement seller, they fixated on price. To the objection, “You are pricey”, a progressive seller, would have responded, “Price is what you pay, value is what you get. The value you get with this fuel with additives is that it reduces your factory maintenance costs by 12 per cent. I assume this is something you are still keen on. Is this correct?”
What about, “You make billions and yet you pay us little”? Besides illuminating the resume, another way of handling it, is one matching the tinge of disrespect in the tone it was said in. And so, we settled on, “Thank God the bank made billions. It is because we did that you chose to deal with us; if we didn’t we both know you wouldn’t be here, would you?”